The companies said late Monday that Microsoft will pay €3.79 billion to buy “substantially all” of the Nokia business, which includes its smartphone operations. Microsoft will also pay €1.65 billion to license Nokia’s patents, the companies said, bringing the deal to €5.44 billion, or $7.18 billion.

The deal has been well received by Nokia’s shareholders, with the share price of the Finnish company climbing nearly 40% higher in early trading.

And more gains may well be ahead.

Not good news for everyone, of course. Nokia’s stock had been very heavily borrowed ahead of this announcement, with 11.9% of the shares out on loan, based on trades which settled on Aug. 30. Borrowing to sell short has been falling but still two-thirds of the shares available from lending programs at the moment are out on loan, according to Alex Brog at data provider Markit.

“Shorts may well be forced into the market to buy back shares to cover their positions,” Mr. Brog added. Short sellers use the stock they buy in the market to close out positions on which they now stand to lose money as the share price rises.

Because they’re likely to doing this en masse, it adds extra momentum to the share price rise.

There are also fundamental reasons why Nokia’s shares should climb. After all what’s left of Nokia will be a lot more investable, according to Nordic investment banking powerhouse ABG Sundal Collier Holding.

Many investors have been very scared of the Nokia balance sheet, ABG Sundal Collier said, due to the amount of cash the Devices unit would have to burn before it was able to turn profitable. “That risk is now gone, and you are left with a fairly stable Networks business and a map/patent portfolio.”

Meanwhile Deutsche Bank has decided to upgrade its recommendation on Nokia from a sell to a hold, citing the material expected benefits to Nokia’s earnings, net cash and the upside potential in its share price from the current levels.

Nokia’s Devices division has been burning though around €600 million in quarterly free cash flow over the last 18 months, Deutsche Bank noted. And if the German banking giant applies similar multiples to what’s left of Nokia as apply to Ericsson (ERIC), and add back €1.40/share in cash proceeds from the deal then Nokia could potentially climb to €4.40/share. This compares with a current share price of €4.08.

A comparison with Swedish technology giant Ericsson is valid, said Nordea, as with this deal “we say farewell to the Nokia we knew and welcome a company which becomes a miniature version of Ericsson.”